Athenahealth Earnings: Margins Shrink, Yet Double Digit Revenue Growth

Rising costs hurt athenahealth, Inc. (NASDAQ:ATHN) in the most recent quarter as profit dropped from a year earlier.

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athenahealth Earnings Cheat Sheet for the Second Quarter

Results: Net income for athenahealth, Inc. fell to $4.2 million (11 cents per share) vs. $5.2 million (14 cents per share) a year earlier. This is a decline of 19.9% from the year-earlier quarter.

Revenue: Rose 32.9% to $103.5 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: athenahealth, Inc. fell short of the mean analyst estimate of 16 cents per share. Analysts were expecting revenue of $103.7 million.

Quoting Management: “I am very pleased with our execution so far this year and our continued focus on becoming medical care givers most trusted service,” said Jonathan Bush, the Company’s Chairman and Chief Executive Officer. “Be it confirmation of the Affordable Care Act or the results of our third annual Physician Sentiment Index, all evidence suggests that cloud-based services are on the right side of history. The athenahealth team understands the growing cost of care coordination placed on medical care givers today and remains focused on improving that experience in a sustainable way. During the past quarter, we brought athenaNet mobile with the launch of our iPhone application, expanded our service offerings to include credentialing and eligibility denials, and expanded our client training and support through the athenaCareSM service. By listening to our clients and understanding their concerns, athenahealth will remain better equipped to help our clients manage change while improving their financial and operational performance regardless of how their services are paid for.”

Key Stats:

The company has seen double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 34%, with the biggest boost coming in the first quarter when revenue rose 38.1% from the year earlier quarter.

The company has now seen net income fall in each of the last three quarters. In the first quarter, net income fell 25.3% from the year earlier, while the figure fell 27% in the fourth quarter of the last fiscal year.

The company fell short of estimates last quarter after being in line with expectations the quarter before with net income of 8 cents.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the third quarter has moved down from 19 cents a share to 18 cents over the last sixty days. Over the past three months, the average estimate for the fiscal year has climbed from 62 cents per to share to 67 cents.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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